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You are viewing the version of the document as on 2021-09-08.

SUP 15.17 Notification of regulated income by limited scope SMCR benchmark firm

Application

SUP 15.17.1R

1This section of the FCA Handbook applies to a limited scope SMCR benchmark firm.

Purpose

SUP 15.17.2G
  1. (1)

    1As explained in SYSC 23 Annex 1 6.12R, the FCA may grant a waiver to certain benchmark firms that treats them as a limited scope SMCR firm.

  2. (2)

    One of the eligibility conditions that the FCA anticipates it will apply is that the firm’s income from benchmark activities is below 20% of its total income.

  3. (3)

    The purpose of this section of the FCA Handbook is to allow the FCA to monitor whether a firm continues to meet that condition after it has received the waiver.

  4. (4)

    The waiver may modify or replace this section to be consistent with the basis on which a firm receives the waiver if the firm receives the waiver:

    1. (a)

      on a different basis from the one described in (2);

    2. (b)

      on the basis of an adjusted calculation of revenue as contemplated by SYSC 23 Annex 1 6.17G(5) (Benchmark firms: When the waiver is likely to be available); or

    3. (c)

      on some other basis inconsistent with this section.

Definitions

SUP 15.17.3R

1In this section of the FCA Handbook:

  1. (1)

    a firm’s reporting year means the annual period in respect of which it prepares its annual financial statements;

  2. (2)

    reporting date is defined in SUP 15.17.9R;

  3. (3)

    annual regulated income is defined in SUP 15.17.6R;

  4. (4)

    annual income is defined in SUP 15.17.5R.

Obligation to make calculations

SUP 15.17.4R

1A firm must calculate, for each reporting year, whether or not its annual regulated income is less than 20% of its annual income.

SUP 15.17.5R

1A firm’s annual income for a reporting year is the gross inflow of economic benefits (i.e. cash, receivables and other assets) recognised in the firm’s annual financial statements for that reporting year.

SUP 15.17.6R

1A firm’s annual regulated income is its annual income in respect of, or in relation to, activities in the United Kingdom that comprise a necessary part of its business as a regulated benchmark administrator.

SUP 15.17.7R
  1. (1)

    1Where the sales and marketing of a benchmark are undertaken by a separate legal entity, the firm is responsible for identifying the relevant income and treating it as its own income.

  2. (2)

    To avoid double counting, the firm must include only the income from sales and exclude any amount paid to it from that income to pay for its expenses as a regulated benchmark administrator.

SUP 15.17.8R

1A firm must calculate its annual regulated income fairly, consistently and in accordance with generally accepted accounting practice.

SUP 15.17.9R
  1. (1)

    1A firm must complete the calculation in SUP 15.17.4R no later than 80 business days after the accounting reference date for the applicable reporting year.

  2. (2)

    This section of the FCA Handbook refers to the date in this rule as the ‘reporting date’.

Obligation to notify the FCA

SUP 15.17.10R

1A firm must notify the FCA if its annual regulated income is 20% or more of its annual income for a reporting year if, in the previous reporting year, its annual regulated income was less than 20% of its annual income or it had no annual income.

SUP 15.17.11R

1A firm must notify the FCA if its annual regulated income is less than 20% of its annual income for a reporting year if, in the previous reporting year, its annual regulated income was 20% or more of its annual income.

SUP 15.17.12R

1A firm must make the notification in SUP 15.7.10R or SUP 15.17.11R no later than the reporting date for the reporting year in question.

SUP 15.17.13G

1The notification obligations in this section apply whether this is the first time the relevant event has occurred or whether it has happened before.

SUP 15.17.14G

1A firm need not include the amount of its annual regulated income or annual income in a notification under this section.

SUP 15.17.15G

1A firm’s reporting year may start or end before it became a firm or a limited scope SMCR benchmark firm.

SUP 15.17.16G

1A firm should make the notification in SUP 15.7.10R even if it had no annual regulated income in the previous reporting year because, for example, it has only recently started its benchmark activities.

SUP 15.17.17G
  1. (1)

    1This section of the FCA Handbook does not require a firm regularly to notify the FCA whether its annual regulated income is 20% or more of its annual income or less than 20%.

  2. (2)

    Instead this section only requires a firm to notify the FCA when its annual regulated income crosses (upwards or downwards) the 20% mark.

  3. (3)

    So, for example, if the firm’s annual regulated income stays below the 20% mark it will never need to notify the FCA under this section.

How to submit notifications

SUP 15.17.18R

1A firm does not have to use the form in SUP 15 Annex 4R (Notification form) to make a notification under this section of the FCA Handbook but must include the details required by Section A of that form (Personal Details).

SUP 15.17.19G

1Subject to SUP 15.17.18R, SUP 15.7 (Form and method of notification) applies to notifications under this section of the FCA Handbook.